FEDERAL ENERGY ISSUES: ELECTRIC RESTRUCTURING
by Lance Adkins
A drive for National Energy Policy legislation is gaining momentum, as national security and economic stimulus is critically tied to reliable and affordable energy supplies. While legislation normally moves along at a snail's pace, when national security is perceived to be at stake, the congressional leadership and White House get involved early, and the entire process can move along much faster. By the time you read this article, legislation may look nothing like what I read today, but the end result will certainly impact consumers for years to come.
Two pieces of draft energy policy legislation have risen to the top in Washington, as congress seeks to establish new, long-term, national energy policy. One of New Mexico's own, Senator Jeff Bingaman, chairman of the Senate Energy and Natural Resources Committee, has worked to draft comprehensive legislation dealing with many issues, including some controversial points such as global climate change and electricity restructuring. Recent new reports have indicated that some Senate Republicans have urged Senator Bingaman to strip controversial measures from the bill to avoid jeopardizing the entire legislative package. It is my understanding that the Bush Administration will not support Senator Bingaman's legislation in its current form.
Electric Cooperatives, like Farmers' Electric, have been working through our national association, the National Rural Electric Cooperative Association (NRECA), to address how proposed legislation will affect consumer-owned utilities. While NRECA remains concerned with portions of the bill, Senator Bingaman's committee has been responsive to consumer-owned utility issues.
Representative Joe Barton of Texas, Chairman of the House Subcommittee on Energy and Air Quality, also recently released draft legislation, the "Electric Supply and Transmission Act". In the past, Senator Barton has also worked with consumer owned utilities to address their concerns. However, at this time, Representative Barton's "discussion draft" appears to seriously undermine specific consumer protections in law today. In addition, the bill increases federal oversight of small utilities currently regulated by the individual states themselves. This duplication of regulatory oversight is certain to increase costs to consumers. Interestingly, Senator Barton's legislation exempts a large portion of his home state of Texas from many of the alleged benefits in the bill.
Specific concerns for Cooperatives in the Barton bill are:
1) Extending federal jurisdiction into areas traditionally governed at the state and local level such as transmission sighting, net metering, and consumption/power demand reduction.2) Full repeal of the Public Utility Holding Company Act of 1935, which provides certain consumer safeguards and cost controls, including the Federal Energy Regulatory Commission's (FERC) merger review authority.
3) FERC would be authorized to impose net metering programs in states that have elected to not do so. Net metering is a controversial program whereby consumers with self-generation capabilities are able to connect to utility infrastructure without paying full costs associated with interconnection. Other consumers end up subsidizing these consumers.
4) Would require FERC to develop consumption/power demand reduction programs such as "negawatt", enabling consumers to sell unused energy to third parties. This sounds good on the surface, but, tracking usage and sales would require substantial investments in systems necessary to track and bill the few consumers large enough to make the program viable.
In short, this legislation appears to relax the rules for the largest utilities in the nation, and significantly expands federal oversight authority over rural electric cooperatives, which are some of the smallest utilities in the nation. They fail to recognize that cooperatives are consumer-owned and controlled by the very people they serve. Farmers' Electric, and other cooperatives in New Mexico are currently writing letters of opposition to Representative Barton's proposed legislation. Letters are being sent to New Mexico Representative Heather Wilson, who is a member of Barton's committee. In the past, Representative Wilson has been responsive and considerate of consumer-owned utility views and concerns.
If you would like additional information, the individual bills and bill summaries are available on Senator Bingaman and Representative Barton's official web sites respectively.
Lance Adkins is the General Manager of Farmers' Electric Cooperative in Clovis, New Mexico, providing electrical service to approximately 10,500 meters in New Mexico.
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